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ITG Shares Its Perspectives On Flash Trades With Zero Hedge

Tyler Durden's picture




 

Zero Hedge recently discussed Implementation Shortfall (slippage) costs courtesy of empirical data made available by ITG. We are happy to share with our readers some of ITG's perspectives on the topic of Flash orders and Dark Pools.

Mr. Durden:

I am among the many readers of Zero Hedge here at ITG (we don’t block access to financial blogs of any stripe).  I read with interest your post on “The Cost of High Frequency Trading” (08/02/2009, 11:36). 

While we are happy to see that you find our research on Implementation Shortfall to be useful, we just wanted to clarify a couple of things:

1. The ban on most 3rd party algorithms in POSIT is not new – the quote from our CEO you cite is from December 2007. 

2.  Regarding high frequency trading – the vast majority of our clients are institutional investors.  We do very little business with high frequency traders as they are not our core customer base.  We have developed proprietary anti-gaming software and liquidity filters to prevent our clients’ orders from interacting with toxic liquidity. We also do not interact with flash orders in any venue.

Best regards,

 

Carolyn

Corporate Communications

Investment Technology Group

 

 

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Tue, 08/04/2009 - 15:23 | 24485 Pizza Delivery Man
Pizza Delivery Man's picture

http://trading-stock-market.blogspot.com/2009/06/stock-market-crash-1929.html

Would you look at that beautiful rally. Kind of eery the similarities up to this point. There is even a head and shoulders pattern in there that ended up failing.

Tue, 08/04/2009 - 15:35 | 24525 Anonymous
Anonymous's picture

You are applying disinfecting sunlight to many issues
but I don't want to lose sight of the Macro issue
like the pizza guy sez.

Tue, 08/04/2009 - 15:36 | 24526 Anonymous
Anonymous's picture

Look at this, its interesting.

http://online.barrons.com/article/SB124931289225201697.html?ru=yahoo

HERE IT IS..IN YOUR FACE...THE MASTER PLAN ALL ALONG....

If this Proposal is approved, there may be other effects on the stockholders, including the following:

Citadel may exercise significant influence over the Company and Citadel’s interests may conflict with the interests of other stockholders.

Citadel holds a majority of the outstanding notes in each series of the Company’s high-yield debt securities.

Following the Debt Exchange and Public Equity Offering, the Company estimates that the Common Stock owned by Citadel, together with the Common Stock issuable on conversion of the Debentures received by Citadel, will represent 49% of the Company’s Common Stock on a fully diluted basis, depending on the total amount of Notes tendered in the Debt Exchange.

This would most likely be sufficient to permit Citadel to elect a substantial number of directors and control or significantly impact corporate policy.

Citadel will be unable to accomplish these matters for so long as it is subject to certain rules of the OTS regarding rebuttal of control over thrifts and thrift holding companies.

If these rules change, or if Citadel receives a waiver or decides to become a thrift holding company, it will be in a position to elect a substantial number of directors and to control, or substantially impact, corporate policy.

Further, if Citadel acquires common shares representing more than 50% of the total voting power, holders of the Company’s debt=2 0securities would have the right to require the Company to repurchase all such securities for cash at a premium to their face amount.

COMMENT: IN COMMON PARLANCE...TAKE etfc PRIVATE FOR PENNIES OVER MARKET SHARE PRICE AT THE TIME. AND IT WILL WORK TOGETHR WITH THE LIKES OF COATOU (WITH A PRIVATE DEAL FOR COTOUE TO OWN PART OF CITADEL IN A SEPARATE DEAL.

In addition, Citadel is an independent entity with its own investors and is entitled to act in its own economic interest with respect to its equity and debt investments in E*TRADE.

COMMENT: WITH ITS OWN INVESTORS...WHO ARE THEY...INVESTORS LIKE COATOU

Any sales by Citadel of the Company’s Common Stock it received under the Investment Agreement, in the Public Equity Offering or upon conversion of the Debentures may have a depressing effect on the trading price of the Company’s Common Stock.

After the Debt Exchange, Citadel would own 71% of the Class A Debentures and 88% of the remaining outstanding 2017 Notes.

COMMENT: IT'S IN YOUR FACE, BECAUSE NASDAQ FORCES LATON'S HAND...HE MUST TELL THE PUBLIC.

Citadel has a right to declare defaults and enforce remedies just like any other lender for so long as Citadel retains 25% or more of the applicable series of high-yield debt securities

Tue, 08/04/2009 - 15:44 | 24545 Anonymous
Anonymous's picture

"toxic liquidity"....paging Mary Schiparo, Mr. Schumer,

(oh what the hell for laughs) Barney Frank, Chris Dodd....ok, how about this....ANY POLITICIAN....

will the people's rep...please stand up, please stand up, please stand up.....

Tue, 08/04/2009 - 15:45 | 24547 Anonymous
Anonymous's picture

"toxic liquidity"....paging Mary Schiparo, Mr. Schumer,

(oh what the hell for laughs) Barney Frank, Chris Dodd....ok, how about this....ANY POLITICIAN....

will the people's rep...please stand up, please stand up, please stand up.....

Tue, 08/04/2009 - 15:47 | 24551 Anonymous
Anonymous's picture

Is Cash for Clunkers the first green shoot of from the Moral hazard seeds that were sown during the past 15 months?

Tue, 08/04/2009 - 15:57 | 24584 Anonymous
Anonymous's picture

ITG is clearly a solid shop. They read the work, they respond it. ZH posts it.

That is the way it should be. Kudos to all.

Tue, 08/04/2009 - 16:03 | 24598 Anonymous
Anonymous's picture

That new catch phrase is getting around...toxic order flow/toxic liquidity!

Tue, 08/04/2009 - 16:30 | 24668 Anonymous
Anonymous's picture

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Tue, 08/04/2009 - 17:18 | 24768 Anonymous
Anonymous's picture

my thoughts exactly

Tue, 08/04/2009 - 17:30 | 24790 Anonymous
Anonymous's picture

asdf

Tue, 08/04/2009 - 16:31 | 24672 Anonymous
Anonymous's picture

Very nice.

Tue, 08/04/2009 - 19:00 | 24957 Deferred Comp
Deferred Comp's picture

 

Ok. Now we are getting somewhere.  Let's expand on that topic of "toxic liquidity" and the need for "anti-gaming" software.

The can of worms is officially ripped wide open .  

Nice !

Wed, 08/05/2009 - 08:44 | 25522 Deferred Comp
Deferred Comp's picture

TD when are you going to tackle Indications of Interest ?  I'm not sure ITG will be deserving all the mad props being heaped on them.

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